Constructing a GHG Marginal Abatement Cost Curve

Marginal abatement cost curves (MACC) present measures to reduce greenhouse gas (GHG) emissions in the order of their cost-effectiveness. It is a straightforward tool for presenting carbon emissions abatement options relative to a baseline (typically a business-as-usual (BAU) pathway). A MAC curve allows for an easy-to-read visualisation of various mitigation options or measures organised by a single, understandable metric: the economic cost of emissions abatement.

Marginal abatement cost curves (MACCs) are broken into discrete ‘blocks’. Each block represents an individual or a set of similar carbon abatement measures. For each block (or measure), the width indicates the amount of potential carbon emissions abatement (tCO₂) in a year, while the height estimates the marginal cost of the carbon emissions abatement (€/tCO₂). Typically, the blocks are ordered such that the lowest cost options, which may represent net cost savings (negative €/tCO₂), are shown first on the left, with subsequent higher cost options proceeding to the right.

Marginal abatement cost curves (MACCs) are useful for framing carbon emissions abatement options, providing a clear and accessible tool that orders measures on a simple economic metric (€/tCO₂). This allows measures from various sectors (e.g. transport and energy) to be compared on equivalent terms, serving as an initial lens of where abatement opportunities are potentially the largest and most cost-effective.

Therefore, MACCs can be powerful for robust initial framing and identification of options for further evaluation. In this sense, MACCs provide a great conversation starter from which deeper discussion and analysis can evolve with consideration of additional important dimensions and suitable policy options for unlocking the potential in each block.

Despite the appealing simplicity of a MACCs, useful interpretation requires a great deal of care and expertise. Marginal abatement cost curves alone are not sufficient to base policy decisions on and should be used in combination with other carbon calculation models to ensure accuracy in decision-making.

To visualise the potential emission reductions in an organisation, we support organisations in constructing an abatement curve. To do that, we start by making, together with your organisation, the key methodological choices for setting up a MACC that is relevant to you. We do this based on the following choices:

1. Whether your organisation takes a social or business perspective;
2. Whether and how the abatement measures interact;
3. Whether your organisation chooses a frozen technology emission baseline or a baseline that takes an autonomous efficiency improvement into account;
4. Which measures are included in the analysis.

The next step is identifying and quantifying energy efficiency improvements for different types of scenarios: business as usual, economic and ambitious. After this, we define the abatement potential and cost per action, which leads to generating a curve showing the relationship between marginal abatement cost and emissions abatement.

The MACC can be shown in a histogram or a curve diagram:

• Histogram: The histogram assesses the cost and reduction potential of each single abatement measure. Each bar represents a single mitigation option.
• Curve diagram: The curve indicates the cost, usually in €/t CO₂-eq, associated with the last unit (the marginal cost) of emission abatement. The curve enables you to analyse the cost of the last abated unit of CO₂ for a defined abatement level, while the area under the curve gives the total abatement costs.

In both cases, moving along the curve from left to right, the cost-effectiveness of low carbon options worsens, since each ton of CO₂eq mitigated becomes more expensive. Some options may reduce emissions and save money, other options may reduce more emissions, but incur a positive cost.